BNM Issues Policy Documents on D-SIB and Capital Adequacy Frameworks
BNM issued policy documents on the framework for domestic systemically important banks (D-SIBs) and on the capital adequacy frameworks for both conventional and Islamic banks. The policy on D-SIBs sets out the assessment methodology to identify D-SIBs in Malaysia and contains the inaugural list of D-SIBs. Also published were the frequently asked questions and the response to feedback received to the policy consultation, along with the associated reporting template, reporting interpretations, and submission instructions. Additionally, the capital adequacy frameworks (capital components) for conventional and Islamic banks set out the approach to compute regulatory capital adequacy ratios as well as the levels of ratios at which a financial institution is required to operate. The policy documents came into effect on February 05, 2020.
The policy document on D-SIB framework sets out the higher loss absorbency (HLA) and reporting requirements applicable to financial institutions, along with the assessment methodology employed to identify D-SIBs in Malaysia. BNM, at its discretion, may impose additional requirements and policy measures as deemed appropriate to manage risks posed by D-SIBs. The banking groups identified as D-SIBs based on the 2018 data and the assessment methodology set out in the policy document are as follows:
- Malayan Banking Berhad (Bucket 2)
- CIMB Group Holdings Berhad (Bucket 2)
- Public Bank Berhad (Bucket 1)
In accordance with the D-SIB framework, the applicable HLA requirement for the identified D-SIBs ranges between 0.5% to 1.0% of risk-weighted assets, at the consolidated level. The HLA requirement for these D-SIBs will come into effect on January 31, 2021. Going forward, BNM will annually update the list of D-SIBs and publish this list with the release of the Financial Stability Review in the second half of each year.
Related Links
Effective Date: February 05, 2020
Keywords: Asia Pacific, Malaysia, Banking, Islamic Banking, Basel III, Capital Adequacy Framework, D-SIBs, Reporting, HLA, BNM
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FED Releases Hypothetical Scenarios for Stress Test Exercise in 2020Related Articles
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
EBA Examines Asset Encumbrance in Banking Sector
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
EBA Publishes Methodological Guide to Mystery Shopping
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
APRA Issues Update on Capital Reform Policy Settings for Banks
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
CPMI-IOSCO Assess Continuity Planning of Market Infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
BoE Announces Changes to Validation Rules for Form BTL
The Bank of England (BoE) published questions and answers (Q&A) on OSCA to BEEDS migration for statistical reporting as well a presentation from the project overview session held with statistical reporters.
BCBS Proposes Changes to Process for Reviewing G-SIB Methodology
The Basel Committee on Banking Supervision (BCBS) is consulting on a technical amendment to the Basel Framework to reflect a new process reviewing the global systemically important bank (G-SIB) assessment methodology.
